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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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Day Traders Diary

5/21/18

 

Weekend comments from Treasury Secretary Steven Mnuchin, who said that a trade war between the U.S. and China has been put on hold, helped the U.S. stock market rebound from last week's losses on Monday. The major averages did settle below their session highs -- the Nasdaq (+0.5%) notably so -- but the Dow (+1.2%) and the S&P 500 (+0.7%) still finished with comfortable gains. The small-cap Russell 2000 (+0.7%) advanced to a new record high for the fourth session in a row.

Mr. Mnuchin's announcement followed last week's trade negotiations between Washington and Beijing, which reportedly ended with China agreeing to buy more goods from the U.S. to reduce its trade surplus with America. While there wasn't a specific dollar amount attached to the additional Chinese purchases, the shelving of tariff threats between the world's two largest economies alone was enough to encourage buyers to re-enter the mix. Gains were broad-based on Monday, with all 11 S&P sectors closing in the green.

The industrial sector (+1.5%) finished at the top of the sector standings. The group benefited from a 3.6% increase in shares of Boeing (BA 363.92, +12.69), which have served as a proxy for trade concerns. Meanwhile, General Electric (GE 15.26, +0.29) shares also had a positive outing, adding 1.9%, after the 126-year-old giant unveiled an $11.1 billion deal to merge its transportation business with locomotive manufacturer Wabtec (WAB 98.55, +3.36). GE shares did give back some gains though following reports that further dividend cuts (or even dividend elimination) are possible.

Technology (+0.8%) got off to a good start, vying with industrials for first place in the sector standings, but eventually fell back. Shares of several chipmakers, including NVIDIA (NVDA 244.24, -1.70) and Texas Instruments (TXN 110.41, -0.13), weighed on the group, but shares of Micron (MU 55.48, +2.09) rallied 3.9% after the company raised its fiscal Q3 guidance.

Elsewhere, the lightly-weighted telecom services (+1.5%) and real estate (+1.0%) sectors were also notable advancers, trimming their losses for the year, as was the energy group (+1.0%), which took advantage of another rise in the price of crude oil. WTI crude futures advanced 1.4% to $72.26 per barrel, marking their highest close since November 2014.

On the downside, the health care group (+0.1%) finished at the bottom of the sector standings as biotechnology shares weighed, evidenced by a 1.3% decline in the iShares Nasdaq Biotechnology ETF (IBB 106.38, -1.42). Shares of biotech giant Celgene (CELG 74.69, -3.68) were particularly weak, closing lower by 4.7%; that marks an eight-month loss of around 50% for Celgene.

In the bond market, Treasuries ended Monday on a flat to lower note, cutting the 2s10s spread by three basis points. The yield on the benchmark 10-yr Treasury note finished unchanged at 3.07%, while the yield on the 2-yr Treasury note advanced three basis points to 2.57%. Yields move inversely to prices. The U.S. Dollar Index, meanwhile, slipped 0.1% to 93.47, retreating from Friday's a five-month high.

Investors did not receive any notable economic data on Monday.

  • Nasdaq Composite +7.1% YTD
  • Russell 2000 +6.6% YTD
  • S&P 500 +2.2% YTD
  • Dow Jones Industrial Average +1.2% YTD
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